Stocks Are Rallying Too Much On Vaccine News, Says This Market Expert

TOPLINE

While reports of positive data from potential coronavirus treatments have helped propel the market higher in recent months, investors are far too optimistic about a vaccine and stocks shouldn’t be rallying so much on each bit of news, warns Vital Knowledge founder Adam Crisafulli.

KEY FACTS

What to watch for

There are rising concerns among health experts that the Trump administration will push the FDA to issue emergency approval for at least one coronavirus vaccine drug before the November presidential election, regardless of whether the research justifies it. Markets seem increasingly confident of a vaccine securing approval in the fall, and as such, investors “should be initially skeptical about embracing any such announcement concerning a vaccine,” Crisafulli argues. “The vaccine process is being accelerated so much that critical questions are unlikely to have answers,” such as whether the treatment will have side effects or if patients will still be contagious.

Key background

Stocks recently closed out their best quarter in decades, despite a recent spike in new coronavirus cases across the country. Many states in the South and West are reporting record high numbers of cases, with more than a dozen pausing or rolling back reopening plans altogether. But the market has still bounced sharply from its coronavirus recession low point in late March: The Dow surged 18% in the second quarter, its best quarter since 1987. The S&P jumped over 20% for its best quarter since 1998. Both are still down for the year, however—the Dow by over 10% and the S&P by nearly 4%.

Further reading

S&P 500 Jumps 0.5% After Pfizer Coronavirus Vaccine News (Forbes)

Dow Surges 500 Points As Investors Bet On A Coronavirus Vaccine Breakthrough (Forbes)

Investors Are Way Too Optimistic About An Economic Rebound, According To This Market Expert (Forbes)

Stocks Rally, Dow Up 500 Points After Gilead’s Coronavirus Treatment Shows ‘Positive Data’ (Forbes)

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